TCU to sell bonds for Worth Hills Village construction

    478
    print

    It is not uncommon for universities like TCU to issue bonds to pay for new construction.

    “[TCU] has issued bonds for a number of years for capital projects,” Director of Fitch Ratings Education & Nonprofit Institutions Eric Kim said.

    Fitch rated TCU with an “AA-” rating for the bonds. Red River Education Finance Corporation is expected to issue the bonds, which are set to be sold during the week of October 10th, according to the Fitch release.

    TCU plans to sell $39.3 million in bonds next month to pay for the construction of three new residence halls that would add more than 400 beds to university housing, according to a report on Fitch Ratings.

    According to the Housing and Residence Life website, TCU broke ground on Worth Hills on Sept. 16. Metal fencing currently restricts students from a section along Stadium Drive that is under construction. The utility work is supposed continue through the end of the year.

    “Using bonds, which are typically paid off over a 20-30 year time-frame, also allows the university to evenly spread the payment of the cost of such construction over a multi year period,” Brian Gutierrez, Vice Chancellor for Finance and Administration said in an email.

    Fitch believes that TCU has a very high credit quality, Kim said.

    Fitch’s release said the rating was based on several factors, including “a healthy demand for undergraduate, graduate, and post-doctorate education; strong financial and investment management practices… and significant fundraising capabilities.”

    The only cited drawback was that “typically” 70 percent of TCU’s operating expenses are covered through student-generated revenue.

    The most recent bonds issued by TCU were sold in January 2010. The bonds sold in 2010 were used to refund existing bonds and to fund capital and housing facilities.

    A clarification was made on Sept. 29 at 1:00 p.m. to include how TCU's expenses were handled.